Intrinsic value of Clayton Williams Energy - CWEI

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$131.90

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$131.90

 
Intrinsic value

$2.28

 
Up/down potential

-98%

 
Rating

str. sell

 
Value-price divergence* premium content

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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CWEI stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 2.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -25.89
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  166
  266
  410
  614
  890
  1,256
  1,727
  2,318
  3,044
  3,917
  4,947
  6,143
  7,511
  9,053
  10,772
  12,665
  14,733
  16,971
  19,376
  21,945
  24,672
  27,556
  30,592
  33,778
  37,114
  40,598
  44,230
  48,014
  51,950
  56,043
  60,297
Variable operating expenses, $m
 
  397
  613
  917
  1,330
  1,877
  2,580
  3,463
  4,548
  5,852
  7,391
  9,178
  11,221
  13,525
  16,093
  18,922
  22,011
  25,355
  28,948
  32,785
  36,860
  41,168
  45,704
  50,465
  55,448
  60,653
  66,080
  71,733
  77,613
  83,728
  90,084
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  145
  397
  613
  917
  1,330
  1,877
  2,580
  3,463
  4,548
  5,852
  7,391
  9,178
  11,221
  13,525
  16,093
  18,922
  22,011
  25,355
  28,948
  32,785
  36,860
  41,168
  45,704
  50,465
  55,448
  60,653
  66,080
  71,733
  77,613
  83,728
  90,084
Operating income, $m
  21
  -131
  -203
  -303
  -440
  -621
  -853
  -1,145
  -1,504
  -1,935
  -2,444
  -3,035
  -3,710
  -4,472
  -5,321
  -6,257
  -7,278
  -8,384
  -9,572
  -10,841
  -12,188
  -13,612
  -15,112
  -16,686
  -18,334
  -20,055
  -21,850
  -23,719
  -25,663
  -27,685
  -29,787
EBITDA, $m
  167
  104
  161
  240
  349
  492
  676
  908
  1,192
  1,534
  1,937
  2,406
  2,941
  3,545
  4,218
  4,959
  5,769
  6,645
  7,587
  8,593
  9,661
  10,790
  11,979
  13,227
  14,533
  15,897
  17,319
  18,801
  20,342
  21,945
  23,611
Interest expense (income), $m
  49
  53
  52
  97
  160
  246
  359
  505
  689
  913
  1,184
  1,504
  1,874
  2,298
  2,776
  3,309
  3,896
  4,537
  5,231
  5,977
  6,773
  7,618
  8,512
  9,453
  10,441
  11,475
  12,555
  13,681
  14,854
  16,074
  17,343
Earnings before tax, $m
  -322
  -184
  -255
  -400
  -600
  -866
  -1,212
  -1,650
  -2,192
  -2,848
  -3,628
  -4,538
  -5,585
  -6,771
  -8,097
  -9,566
  -11,174
  -12,921
  -14,803
  -16,817
  -18,961
  -21,231
  -23,624
  -26,140
  -28,775
  -31,530
  -34,405
  -37,400
  -40,517
  -43,760
  -47,130
Tax expense, $m
  -30
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -292
  -184
  -255
  -400
  -600
  -866
  -1,212
  -1,650
  -2,192
  -2,848
  -3,628
  -4,538
  -5,585
  -6,771
  -8,097
  -9,566
  -11,174
  -12,921
  -14,803
  -16,817
  -18,961
  -21,231
  -23,624
  -26,140
  -28,775
  -31,530
  -34,405
  -37,400
  -40,517
  -43,760
  -47,130

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  573
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,495
  1,476
  2,280
  3,409
  4,947
  6,979
  9,595
  12,879
  16,911
  21,760
  27,485
  34,130
  41,727
  50,296
  59,842
  70,363
  81,849
  94,284
  107,646
  121,915
  137,068
  153,087
  169,954
  187,657
  206,187
  225,542
  245,725
  266,743
  288,612
  311,350
  334,983
Adjusted assets (=assets-cash), $m
  922
  1,476
  2,280
  3,409
  4,947
  6,979
  9,595
  12,879
  16,911
  21,760
  27,485
  34,130
  41,727
  50,296
  59,842
  70,363
  81,849
  94,284
  107,646
  121,915
  137,068
  153,087
  169,954
  187,657
  206,187
  225,542
  245,725
  266,743
  288,612
  311,350
  334,983
Revenue / Adjusted assets
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
Average production assets, $m
  1,029
  1,646
  2,544
  3,804
  5,520
  7,788
  10,706
  14,371
  18,870
  24,281
  30,668
  38,083
  46,560
  56,121
  66,773
  78,513
  91,329
  105,204
  120,113
  136,035
  152,943
  170,817
  189,638
  209,391
  230,068
  251,665
  274,185
  297,638
  322,039
  347,410
  373,780
Working capital, $m
  524
  -78
  -121
  -181
  -263
  -371
  -509
  -684
  -898
  -1,155
  -1,459
  -1,812
  -2,216
  -2,671
  -3,178
  -3,736
  -4,346
  -5,006
  -5,716
  -6,474
  -7,278
  -8,129
  -9,025
  -9,965
  -10,949
  -11,976
  -13,048
  -14,164
  -15,325
  -16,533
  -17,788
Total debt, $m
  848
  842
  1,566
  2,582
  3,966
  5,795
  8,149
  11,105
  14,734
  19,098
  24,251
  30,231
  37,069
  44,780
  53,372
  62,841
  73,178
  84,369
  96,395
  109,237
  122,875
  137,292
  152,473
  168,405
  185,083
  202,502
  220,666
  239,583
  259,264
  279,729
  300,998
Total liabilities, $m
  1,334
  1,328
  2,052
  3,068
  4,452
  6,281
  8,635
  11,591
  15,220
  19,584
  24,737
  30,717
  37,555
  45,266
  53,858
  63,327
  73,664
  84,855
  96,881
  109,723
  123,361
  137,778
  152,959
  168,891
  185,569
  202,988
  221,152
  240,069
  259,750
  280,215
  301,484
Total equity, $m
  161
  148
  228
  341
  495
  698
  959
  1,288
  1,691
  2,176
  2,749
  3,413
  4,173
  5,030
  5,984
  7,036
  8,185
  9,428
  10,765
  12,191
  13,707
  15,309
  16,995
  18,766
  20,619
  22,554
  24,572
  26,674
  28,861
  31,135
  33,498
Total liabilities and equity, $m
  1,495
  1,476
  2,280
  3,409
  4,947
  6,979
  9,594
  12,879
  16,911
  21,760
  27,486
  34,130
  41,728
  50,296
  59,842
  70,363
  81,849
  94,283
  107,646
  121,914
  137,068
  153,087
  169,954
  187,657
  206,188
  225,542
  245,724
  266,743
  288,611
  311,350
  334,982
Debt-to-equity ratio
  5.267
  5.710
  6.870
  7.570
  8.020
  8.300
  8.490
  8.620
  8.710
  8.780
  8.820
  8.860
  8.880
  8.900
  8.920
  8.930
  8.940
  8.950
  8.950
  8.960
  8.960
  8.970
  8.970
  8.970
  8.980
  8.980
  8.980
  8.980
  8.980
  8.980
  8.990
Adjusted equity ratio
  -0.447
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -292
  -184
  -255
  -400
  -600
  -866
  -1,212
  -1,650
  -2,192
  -2,848
  -3,628
  -4,538
  -5,585
  -6,771
  -8,097
  -9,566
  -11,174
  -12,921
  -14,803
  -16,817
  -18,961
  -21,231
  -23,624
  -26,140
  -28,775
  -31,530
  -34,405
  -37,400
  -40,517
  -43,760
  -47,130
Depreciation, amort., depletion, $m
  146
  235
  363
  543
  789
  1,113
  1,529
  2,053
  2,696
  3,469
  4,381
  5,440
  6,651
  8,017
  9,539
  11,216
  13,047
  15,029
  17,159
  19,434
  21,849
  24,402
  27,091
  29,913
  32,867
  35,952
  39,169
  42,520
  46,006
  49,630
  53,397
Funds from operations, $m
  29
  51
  108
  143
  189
  246
  317
  402
  503
  620
  753
  902
  1,067
  1,247
  1,441
  1,650
  1,873
  2,108
  2,356
  2,616
  2,888
  3,172
  3,467
  3,773
  4,092
  4,422
  4,764
  5,120
  5,488
  5,870
  6,267
Change in working capital, $m
  18
  -29
  -43
  -60
  -82
  -108
  -139
  -174
  -214
  -257
  -304
  -353
  -403
  -455
  -507
  -559
  -610
  -660
  -710
  -758
  -805
  -851
  -896
  -940
  -984
  -1,028
  -1,072
  -1,116
  -1,161
  -1,207
  -1,255
Cash from operations, $m
  11
  -91
  151
  203
  270
  354
  456
  577
  718
  878
  1,057
  1,255
  1,470
  1,702
  1,948
  2,209
  2,483
  2,769
  3,066
  3,374
  3,693
  4,022
  4,362
  4,713
  5,076
  5,450
  5,836
  6,236
  6,649
  7,078
  7,522
Maintenance CAPEX, $m
  0
  -147
  -235
  -363
  -543
  -789
  -1,113
  -1,529
  -2,053
  -2,696
  -3,469
  -4,381
  -5,440
  -6,651
  -8,017
  -9,539
  -11,216
  -13,047
  -15,029
  -17,159
  -19,434
  -21,849
  -24,402
  -27,091
  -29,913
  -32,867
  -35,952
  -39,169
  -42,520
  -46,006
  -49,630
New CAPEX, $m
  -112
  -617
  -897
  -1,260
  -1,716
  -2,268
  -2,919
  -3,665
  -4,499
  -5,411
  -6,388
  -7,415
  -8,477
  -9,561
  -10,652
  -11,740
  -12,816
  -13,874
  -14,910
  -15,921
  -16,909
  -17,874
  -18,821
  -19,753
  -20,677
  -21,597
  -22,520
  -23,453
  -24,401
  -25,372
  -26,370
Cash from investing activities, $m
  313
  -764
  -1,132
  -1,623
  -2,259
  -3,057
  -4,032
  -5,194
  -6,552
  -8,107
  -9,857
  -11,796
  -13,917
  -16,212
  -18,669
  -21,279
  -24,032
  -26,921
  -29,939
  -33,080
  -36,343
  -39,723
  -43,223
  -46,844
  -50,590
  -54,464
  -58,472
  -62,622
  -66,921
  -71,378
  -76,000
Free cash flow, $m
  324
  -856
  -981
  -1,421
  -1,989
  -2,702
  -3,575
  -4,617
  -5,834
  -7,229
  -8,799
  -10,541
  -12,447
  -14,510
  -16,721
  -19,070
  -21,550
  -24,153
  -26,873
  -29,706
  -32,649
  -35,701
  -38,861
  -42,131
  -45,514
  -49,014
  -52,636
  -56,386
  -60,271
  -64,299
  -68,478
Issuance/(repayment) of debt, $m
  88
  -6
  724
  1,017
  1,384
  1,829
  2,354
  2,956
  3,629
  4,364
  5,152
  5,981
  6,838
  7,711
  8,592
  9,469
  10,337
  11,191
  12,026
  12,842
  13,638
  14,417
  15,180
  15,933
  16,677
  17,420
  18,164
  18,916
  19,681
  20,464
  21,270
Issuance/(repurchase) of shares, $m
  164
  848
  338
  517
  759
  1,076
  1,483
  1,990
  2,609
  3,349
  4,220
  5,225
  6,370
  7,656
  9,084
  10,653
  12,361
  14,205
  16,183
  18,291
  20,526
  22,886
  25,367
  27,969
  30,690
  33,530
  36,490
  39,572
  42,777
  46,109
  49,572
Cash from financing (excl. dividends), $m  
  241
  842
  1,062
  1,534
  2,143
  2,905
  3,837
  4,946
  6,238
  7,713
  9,372
  11,206
  13,208
  15,367
  17,676
  20,122
  22,698
  25,396
  28,209
  31,133
  34,164
  37,303
  40,547
  43,902
  47,367
  50,950
  54,654
  58,488
  62,458
  66,573
  70,842
Total cash flow (excl. dividends), $m
  565
  -862
  -258
  -404
  -605
  -873
  -1,221
  -1,661
  -2,206
  -2,865
  -3,647
  -4,560
  -5,610
  -6,799
  -8,129
  -9,601
  -11,212
  -12,962
  -14,847
  -16,864
  -19,011
  -21,284
  -23,680
  -26,198
  -28,837
  -31,595
  -34,472
  -37,470
  -40,590
  -43,835
  -47,208
Retained Cash Flow (-), $m
  139
  -560
  -80
  -113
  -154
  -203
  -262
  -328
  -403
  -485
  -572
  -665
  -760
  -857
  -955
  -1,052
  -1,149
  -1,243
  -1,336
  -1,427
  -1,515
  -1,602
  -1,687
  -1,770
  -1,853
  -1,936
  -2,018
  -2,102
  -2,187
  -2,274
  -2,363
Prev. year cash balance distribution, $m
 
  573
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Discount rate, %
 
  7.80
  8.19
  8.60
  9.03
  9.48
  9.95
  10.45
  10.98
  11.52
  12.10
  12.71
  13.34
  14.01
  14.71
  15.44
  16.22
  17.03
  17.88
  18.77
  19.71
  20.70
  21.73
  22.82
  23.96
  25.16
  26.41
  27.73
  29.12
  30.58
  32.11
PV of cash for distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  50.0
  40.7
  33.2
  27.1
  22.3
  18.4
  15.2
  12.7
  10.6
  8.8
  7.4
  6.3
  5.3
  4.5
  3.8
  3.2
  2.8
  2.4
  2.0
  1.7
  1.5
  1.3
  1.1
  0.9
  0.8
  0.7
  0.6
  0.5
  0.4
  0.4

Clayton Williams Energy, Inc., an independent oil and gas company, explores for, and develops and produces oil and natural gas primarily in Texas and New Mexico. The company’s principal properties are located in the Permian Basin of West Texas and Southeastern New Mexico, as well as the Giddings Area in East Central Texas. As of December 31, 2015, it had estimated proved reserves of 46,569 thousand barrels of oil equivalent. The company also owns interests in and operates oil, natural gas, and water service facilities, which consist of approximately 393 miles of pipeline, 2 treating plants, 1 dehydration facility, and various wellhead type treating and/or compression stations located in the states of Texas. Clayton Williams Energy, Inc. was founded in 1991 and is headquartered in Midland, Texas.

FINANCIAL RATIOS  of  Clayton Williams Energy (CWEI)

Valuation Ratios
P/E Ratio -8
Price to Sales 14
Price to Book 14.4
Price to Tangible Book
Price to Cash Flow 211.4
Price to Free Cash Flow -23
Growth Rates
Sales Growth Rate -25.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -37.8%
Cap. Spend. - 3 Yr. Gr. Rate -17.2%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 526.7%
Total Debt to Equity 526.7%
Interest Coverage -6
Management Effectiveness
Return On Assets -17.8%
Ret/ On Assets - 3 Yr. Avg. -5.8%
Return On Total Capital -28.5%
Ret/ On T. Cap. - 3 Yr. Avg. -11.1%
Return On Equity -126.7%
Return On Equity - 3 Yr. Avg. -47.7%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 53.6%
Gross Margin - 3 Yr. Avg. 61.4%
EBITDA Margin -76.5%
EBITDA Margin - 3 Yr. Avg. 2.7%
Operating Margin 12.7%
Oper. Margin - 3 Yr. Avg. -4.2%
Pre-Tax Margin -194%
Pre-Tax Margin - 3 Yr. Avg. -82.5%
Net Profit Margin -175.9%
Net Profit Margin - 3 Yr. Avg. -70.1%
Effective Tax Rate 9.3%
Eff/ Tax Rate - 3 Yr. Avg. 27.2%
Payout Ratio 0%

CWEI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CWEI stock intrinsic value calculation we used $166 million for the last fiscal year's total revenue generated by Clayton Williams Energy. The default revenue input number comes from 2016 income statement of Clayton Williams Energy. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CWEI stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.8%, whose default value for CWEI is calculated based on our internal credit rating of Clayton Williams Energy, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Clayton Williams Energy.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CWEI stock the variable cost ratio is equal to 149.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for CWEI stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6.2% for Clayton Williams Energy.

Corporate tax rate of 27% is the nominal tax rate for Clayton Williams Energy. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CWEI stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CWEI are equal to 619.9%.

Life of production assets of 7 years is the average useful life of capital assets used in Clayton Williams Energy operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CWEI is equal to -29.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $161 million for Clayton Williams Energy - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 17.641 million for Clayton Williams Energy is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Clayton Williams Energy at the current share price and the inputted number of shares is $2.3 billion.


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Stock chart of CWEI Financial statements of CWEI
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